Inventory Management in Volga Glasses - Term Paper Example

?System research: Inventory management in ‘Volga Glasses’ Introduction As a supplier of beer and soft drink bottles to various companies ‘Volga Glasses’ depends fully on beer and other soft drink companies for developing its marketing strategies. During previous years, there had been a considerable uplift in demand of glass bottles which has increased the scope of Volga Glasses to enhance its supply chains. On the other hand, now Volga Glasses have an urgent need to reorganize its inventory systems. The company depends chiefly of the varying requirements of market and it uses modern software technique for inventory management. In this paper we are glancing on various factors that Volga-Glasses have to deal with when developing and applying a proper strategy for inventory management. There are some main factors that company has to deal with. As most of the soft-drink and beer bottles are liable for reuse and recycling, company gets some of its raw material from defected and used bottles that are supplied back by the beer companies. However, a number of bottles do not reverse and company has to involve glass as the raw material of new bottles. There had been a stagnant increase in the market since last three years which provides and estimation for supposed upcoming market demands. In light of those factors company has to keep a safe number of bottles that can be supplied urgently when required by buyers. On the other hand, a large number of bottles made in advance can create a burden over company’s investing strength. That would also create a lack of fluency in company’s cycle of work. Thus, company has to involve a concrete Inventory management that keeps the overall demand and supply chain in a safe and trustworthy position to provide continuous profit to Volga Glasses. The supply chain and IT Factors Obviously, the purpose of Volga Glasses’ is to enhance and manage its supply chain to perform with a perfect smoothness that does not shake even in the conditions of an urgent tide in market situations. Company uses elegant IT techniques to manage that smoothness. Chiefly the bills are collected as electronic data providing an exact record of supply over a particular period. While mostly a supply chain is maintained over longer period like a year or six months, Volga Glasses is bound to use three month estimation because of the nature of its assets and frequently wavering requirements. Three years ago company has ordered a software organization to design software for their inventory management. The software had produced good results while it had been quite dependent of human inputs and mandatory analysis by the supervisors of Volga Glasses. This software ‘Smart-Task’ bases its strategy in collecting the supply data and comparing the overall cost of raw materials added with the labor and mechanical expenses. Over the time it also manifests the comparative graphs of market tides during various supply chain periods. Company manages to base its strategies in short term chains such as three months as well as yearly managements of supply chains. During last years it had come out that Smart-Task has been accurate and efficient in processing the data to manifest a scenario of the market. However, during the recent immediate ups and downs of market the estimations of Smart-task have failed when external situations like a temporary recession had stricken the market of soft drinks. Therefore an analysis of Company’s requirement and reliability of IT over numerous patterns of system of research is mandatory. Synchronization of IT and HR Out of the data processing methodology of Smart-Task, it has come out that it depends solely on human inputs which provide a base for calculations and estimations. Company’s HR department is responsible for providing the supposed information for future uplifts and lowering of market because Smart-Task puts the data in various graphs that ease the methods of comparisons provide a manifestation of supply chain. The requirement of advance inventory is calculated on a formula that deducts 75% of possible investment in equaling the supposed supply. Thus a 25% of Inventory is kept in advance for urgent needs over any period of three months. In case of stagnant market this calculation does not vary. However, in specific cases HR department has to provide a supposed data for future market demands which are calculated back to estimate the requirement of advance inventory. Similarly there are some other important inputs that HR has to provide for calculations: Contrasting to a three month supply chain, it is analyzed that a larger security is required for yearly supply chains which require a 40% of advance inventory. HR has to make calculation for at least two supply chains when the market demands are higher, especially in summer vacations and festivals seasons. The reverse of raw bottles may vary during various seasons and supply chain may be affected by a wavering cost of raw material. It can be managed by a supposed and estimated calculation of cost for raw material, whether by the raw glasses or recycled bottles. In a comparison of graphs and charts provided by Smart-Task, HR has to make a long term strategy which includes various supposed calculation over Smart-Task given a supposed data for future trading and a virtual scenario. Thus, a synchronization of HR with the IT factors is major requirement to keep the supply chain in smooth cycles. On an ideal scenario, a supply chain may run according to those patterns. However, in critical cases this synchronization plays a vital part for there are numerous factors which lead Smart-Task to misjudge the real requirement of the company. Pros & Cons for IT System in Inventory management First of all, it is most considerable a condition that any IT technique can work only on the programs affixed for possible conditions. It can calculate only over the formulas already established. Also, we see that supplier are frequently observed and asked for their policies by the user companies. In case of Volga Glasses, users are companies that sell their own product attached with its product. Thus, mutual strategy is essentially to be developed from both the types of companies and it requires a sound information sharing. Because, on the other hand, beer companies also go through strict requirement of showing their strategies to retailers to build a trustworthy market reputation with their clients, which are, in market terms, secondary clients to Volga Glasses. We consider two levels of information sharing. With traditional information sharing the supplier only observes the retailers’ orders. With full information sharing the supplier has immediate access to the retailers’ inventory data. We develop an inventory policy for each information-sharing level. Reorder point policies are used with traditional information sharing. The retailers also use reorder point policies with full information, but the supplier does not. Instead, the supplier uses its additional information to better allocate inventory among the retailers and to improve its order decisions. (Cachon and Fisher) A detailed study of market, information and trends is due to HR department of the company. Thus, the community must separate research from market capitalization (Pike and Labs). For example recently there had been uplift in demand of glass bottles but it could be much higher if the consumption of tin cans would not have cut the possibility of higher demands. In fact the overall uplift was a remaining part of overall consumption of beer. In that case HR had to understand the fact that demand of beer had much higher uplift than seen in demand of bottles, which was centre point of strategy making over the last years. The main reason for the success of canned beer was convenience. Because they were smaller than bottles, stackable and didn’t break as easily they were easier to sell (Canned vs Bottled Beer). Also, as tin is cheaper than glass, increasing use of tin cans is a separate issue in making marketing strategies. Thus it seems that a dependence on IT for managing the supply chain may fall into catastrophe but, when used efficiently, its utility as a smart tool is an elegant option. Essentials for a supposed methodology As the over given analysis proposes, it is highly required for IT department of the company to synchronize with the market research team and HR department. Mostly the nature of market is to vary on random patterns during short intervals but its tending is somehow considerable for calculations over the provided inputs. Thus, as the tin cans are manifesting powerful competition in the market, Volga Glasses have to sincerely enhance its power by implementing stronger market research which provides much data to design further strategies for IT systems specific for its purposes. Also, it comes out that Volga Glasses cannot depend on straight calculations that come out of pure data analyses; rather, they have to pay attention to develop their IT skills to make sharp guesses by providing attention to probabilities and estimation over strict calculations. Conclusion Seemingly, Volga Glasses have shown a recent enhancement in their demands and they have successfully managed to cope with managing the supply chain with the help of their software Smart-Task. However, as depicted by their managers and market research department it still seems inefficient to follow the same strategy in near future which may lead to some loss out of strong competition in market and changing trends of their buyers. Thus, company have to pay attention to develop a more detailed market research which can estimate the nature of supply chain in near future and can help develop their new IT strategies for upcoming future. Works Cited Cachon, Ge?rard P. and Marshall Fisher. "Supply Chain Inventory Management and the Value of Shared Information." Management Science August 2000: 1032-1048. Web. "Canned vs Bottled Beer." www.professorshouse.com. 30 September 2011 . Pike, Rob and Bell Labs. Systems Software Research is Irrelevant. Lucent Technologie. 21 Feb. 2011. Read More